Executive Summary
South Africa achieved a historical milestone in 1994 with a peaceful political transition from the apartheid nationalist Government to the ruling ANC, a democracy and birth of the rainbow nation, with the promise of a better future for all. However, the euphoria has waned, leaving a society stuck in apathy, lost in despair and growing tensions and unhappiness due no progress and the growing chasms of inequality. COVID-19 has further aggravated and accelerated the decline of an already ailing economy and further exposed the deep structural rifts and disparities across many levels.
However, South Africa still possess many advantages and is rich with potential to not only recover but become a truly great and successful nation. The challenge though becomes how to achieve and implement a sustainable recovery whilst simultaneously appeasing the short term and immediate challenges.
There are hard choices to be made and the decisions will have to be made by every citizen at an individual and collective level if we are to attain our goals and finally achieve the rainbow nation status.
1. Based on your analysis, including facts-based evidence, how would you describe South Africa in terms of its current realities as is. This includes your analysis of the state, markets and civil society (approx. 5 pages double spaced)
The Political Landscape – a successful transition from apartheid to universal suffrage to present political infractions and jostling…
Apartheid ended after a well negotiated transition and the first democratic elections was held in 1994, when South Africa introduced a system of universal suffrage and multi-party democracy. The African National Congress (ANC) is the majority ruling party and has been driving policy agenda since its victory in 1994. The ANC’s strength emanates from its historical roots in the anti-apartheid struggle and its efforts to end structural social inequalities. The party subscribes to ideologically leftist policies but may be perceived as confused or uncertain with it practical implementation models including private sector-led growth with state-centric economic planning (called “developmental state” model).
South Africa completed its 6th democratic national elections in 2019 and the ANC retained majority votes (57.5%) of National Assembly votes, but experienced its’ worst electoral performance since 1994 and a further decline from 2014. This result mirrored the decline in the 2016 local elections shows the voting outcome for the major political parties. Figure 1 presents the political vote results since the first democratic elections in 1994 until the 2019 elections (IEC Website, Accessed 15 October 2020).
Positive progress was achieved with strengthening of the political system within the country. This was evidenced in the May 2019 elections where 48 political parties contested the election compared to 29 parties in 2014, a 65% increase. (IEC Website, Accessed 15 October 2020). Furthermore, the positive trend of increasing participation of women in the political system, namely through increasing female voter numbers who registered to vote and number of women politicians (increased from 42% in 2014 to 45% in 2019).
A political game changer for the future will be the June 2020 Constitutional Court ruling allowing independent candidates to participate in national and provincial legislative ballots. This ruling came with a 2-year grace period for the National Assembly to amend the law. But, this will definitely further result in a more competitive electoral landscape, a huge positive for society and citizens.
The ruling party internal politics and its’ tenuous alliance with the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP) remains the ANC’s archilles heel. Opposition parties, comprising the Democratic Alliance (DA), Economic Freedom Fighters (EFF), Inkatha Freedom Party (IFP) and the Vryheidsfront (Freedom Front – FF) Plus, have successfully exploited growing voter dissatisfaction within the ANC. The EFF has been the biggest winner, with its party politics heavily influenced by its demagogue founder, Julius Malema, the former ANC Youth League leader. The DA is the second-largest party in parliament and remains haunted by its historical predominantly white past, whilst the EFF, is a populist hard-left party with focus on black empowerment.
A negative offset and growing concern is the declining voter participation, especially among the youth (where unemployment rate is at 50%). In 2019, only 74.5% of those who could vote registered to do so ( 66%) and actual voter participation decreased from 73.47% in 2014. The unemployed and alienated youth (the born frees) will be the decider for future elections (IEC Website).
Government has failed to show decisive action to stop corruption and political interference. There have been many commissions of inquiry established to investigate the malfeasance at state companies but limited action thereafter. The Government’s perceived soft approach and limited or no action is a key reason for the growing unrest and apathy in society.
Appendix A contains graphs of relevant data indicating the recent political voting results and other relevant data.
An economy on life support…
South Africa has a diverse and highly industrialized economy, with GDP per capita of $6,100 (2019). It is the most developed country within Sub-Saharan Africa and generally considered the entry gateway into the rest of the continent. The Johannesburg Stock Exchange is among the 20 largest global bourses, but the overall FTSE/JSE All Share (Johannesburg Stock Exchange) index has been declining over the last year. Yet, despite the economic strengths and advantages, the SA economy continues to deliver a pedestrian performance.
South Africa lost its last remaining major investment-grade sovereign credit rating in March 2020. This was the first time since its return to global markets in 1994 that South Africa has no investment-grade sovereign credit rating from any of the major ratings agencies. The existing economic weakness is compounded by the potential impact of the global coronavirus pandemic.
The present economic policy-making and management has not been successful to address the country’s structural problems. Despite the fact that the government is investing in economic reforms, the financial situation of public companies (SAA, Eskom, etc.) poses a risk to public finances. The fiscal position has been deteriorating over the past 3 years and remains strained due to high debt burdens and interest payments, bail-outs to state-owned enterprises and high Government wage costs. There is the challenge of a widening budget deficit (4.8% at end of 2019, a two-decade high). The debt-to-GDP continues to increase and government debt burden is expected to rise from 69% of GDP in 2019 to 91% by the end of 2023, further constraining spending. The fiscal account deterioration has consequently resulted in the rand depreciation (Dhamija, 2020).
The economy remains weak with the steepest economic contraction registered since 1990, when GDP declined by 51% to June 2020. GDP growth has been consistently low in recent years, averaging 0.8% between 2015 and 2019, with a recession recorded in late 2019. Declining FDI to record low levels also compounded the situation, and was not supported by waning business confidence levels. Political uncertainty negatively affects business confidence (StatsSA website).
Public sector labour costs is about 12% of GDP and approx. a third of total government spend. These levels are excessive when compared to OECD and emerging economies and is unsustainable for SA. Government announced plans to reduce the wage bill, but has been unsuccessful to date and the ANC hesitancy to take action is interlinked to its alliance with SACP and COSATU (IMF Country Report, 2020).
Appendix B references the various economic metrics and measures as referenced.
An unravelling social network…
The optimistic sentiment from the transition to democracy has waned and been dampened by the growing social, demographic political and economic issues. The apartheid legacy only amplifies the scale and gravity of these challenges.
The ANC initially made good progress on post-apartheid socioeconomic transformation but have fallen short of public expectations for more rapid change. These unmet expectations have resulted in the declining votes for the ANC. It is also the reason for the increasing social unrest demonstrations challenging poor service delivery, government corruption and cronyism, access to decent housing and education. In addition, the labour strikes and unrest are also becoming more common.
SA has one of the highest levels of inequality as measured by the Gini index, with significant regional, rural-urban, and racial socioeconomic and infrastructure disparities. Economic inequality in post-apartheid South Africa has widened, creating further disillusionment and unhappiness with the majority. The ANC won power with promises to reduce inequality and the current state is quite the opposite, especially with widening inequality sharply contradicting the country’s constitution, adopted in May 1996 which affords all equal social and economic rights. The majority of the population (mainly Black African) lack access to decent housing and basic services (e.g., electricity and water), especially in rural areas and in the townships.
South Africa’s population is 59,542,957 with a median age of 27.6 years, but a declining total fertility rate (TFR), especially in the urban areas. There is a large youthful population. The total land area is 1,213,090 and thus has a population density of 49 per km2 (127 people per mi2). There is a high urbanisation rate with almost two thirds of the population urban based (Worldometer, 2020).
Unemployment remains stubbornly high, especially within the youth which recorded levels of 50%+. The problem has been exacerbated by the negative economic impact of the COVID-19 pandemic. There are insufficient jobs created and growth has not been pro-poor. This has caused internal migration patterns to more populous provinces of Gauteng and Western Cape in search of better opportunities. These migration patterns further stress an already overloaded social services systems within those areas such as health, housing and education services (Todes, 2010).
The health of South Africans is also of concern, although positive trends are evident, such as the increase in life expectancy even for those infected by HIV. Access to education has improved but the quality of education remains a concern.
Wealth inequality is a raw topic of tension and intergenerational mobility is low meaning inequalities are passed down from generation to generation with little change in inequality over time. The income disparity between ethnicities has narrowed with the emergence of the Black middle class. At the same time, however, income disparities among Black South Africans have increased.
A significant challenge remains the post-apartheid social grant system introduced which has caused both financial and unintended negative social problems, with young women intentionally having children only to access the grants. The social welfare system did reduce inequalities in access to public services and housing. However, poverty persists. Presently, eighteen million people rely on social grants, with 20% of households depending on grants as their main source of income.
The youth feel alienated and have no emotional attachment to the ANC as a liberation movement as this is the so called “born-free generation”. They are more demanding of service delivery and less forgiving of government failures than the older age population. The youth unemployment is a staggering 50% and they blame the ANC government for failing to provide career opportunities.
Racial and socioeconomic segregation relations have improved but the historical baggage still presents severe challenges to social cohesion. Most black South Africans still live in in townships in poverty and their average per capita incomes are roughly one fifth those of the historically privileged white minority. This is a stark contrast to the wealthy, including many whites, who reside in gated, highly secured communities. A contentious issue remains the racial disparities in access to land, despite the continuous implementation of land redistribution and restitution initiatives since 1994. There have been increasing attacks on white farmers, often due to racial or socioeconomic resentments.
Despite significant investment and progressive enabling policy support to improve general basic service delivery such as access to housing and general public services, infrastructure, etc., there remains a severe lack of service delivery and access of services to the most needy of the population.
Appendix C refers to relevant metrics and graphs for the various social measures.